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Cuts 'will increase unemployment'

Source PA News

Updated on 10 June 2010

The Government's deficit reduction measures will raise unemployment close to three million and "stall" any recovery in the jobs market, a new report has warned.

An employment expert said cuts in public spending made the outlook "bleak" for individuals and communities already suffering the greatest hardship.

Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD), said he had revised up his prediction of unemployment levels.

The institute had estimated that the jobless total would reach 2.65 million this year, but its revised forecast is that unemployment will rise to 2.95 million in the second half of 2012 and remain close to that level until 2015.

There was also little prospect of real wage growth throughout this period, while public sector workers were facing pay cuts, said Dr Philpott.

"Although tough fiscal medicine is unavoidable and may boost the UK's long-run economic growth and job prospects, reliance on cuts in public spending rather than tax increases as the primary means of cutting the deficit makes the short-term outlook especially bleak for those individuals and communities already suffering the greatest hardship in society," he said.

"Given what we know historically about the way in which the social burden of unemployment and stagnant average income growth is shared across individuals and communities, the prospects for those already suffering the most disadvantage seem particularly bleak.

"This will present a major challenge to a Government that aims to reduce the deficit while also alleviating poverty, enhancing social mobility and mending a broken society."

Dr Philpott said the coalition Government's approach to deficit reduction owed much to that successfully pursued by Canada's Liberal government in the 1990s.

"This resulted in the loss of 265,000 jobs from the then three million-strong Canadian public sector workforce and an eventual fall in the share of public sector employment in total employment from 26% to 19%. On an equivalent scale, this translates into around 500,000 UK public sector job cuts, in line with the CIPD's own pre-general election baseline estimate for the period 2010-2015."

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